March trading recoups all of February losses.
By R. Chandrasekaran
CHENNAI: Indian stock markets witnessed one of the finest moments in the week ended March 8 as not only the losing streak was halted, but the gains were also significant. The weekly gain of 4 percent has come on the heels of some strong global cues and the pep talk delivered by the finance minister in the aftermath of the budget proposals, which was nothing but a dampener for the stock market in the immediate term.
If the month of February was shattered and battered for the stock market as the gains recorded in January were more than offset by the losses, the six days of trading in March has recouped most of the losses. The Bombay Stock Exchange’s 30-share barometer lost 5.19 percent or 1033.44 points in February, whereas the National Stock Exchange’s Nifty shed 5.66 percent or 341.77 points. The scenario has completely changed in March. The BSE’s Sensex advanced 4.36 percent or 821.69 points and the Nifty jumped 4.44 percent or 252.65 points in March.
The Indian stock markets could not have asked for a better cue than the week’s favorable climate. The rebound in the week was set up by the finance minister when he hinted more sops for economic upside including measures to bump up exports.
Globally too, the conditions was favorable for the stock markets as the service sector in the U.S. remained positive following an upbeat report and that the economy is slowing improvements in the largest economy of the world. Additionally, the Chinese data on exports lifted the worldwide sentiments on the economy. The Dow Jones Industrial Averages too picked up to reach lifetime high thereby suggesting a fresh uptick is on the cards for rest of the region to follow.
The major news to hit the stock markets during the week included Foreign Institutional Investors or FIIs flows from the U.S. may fall due to its spending cut and exports too may face a similar fate; attempted duty evasion of more than Rs.5 million to attract non-bailable offense; RBI Governor D Subba Rao terms 5-6 percent growth is not enough as India has potential for a double digit growth if some issues are addressed; IT Department’s intelligence unit to track tax evaders; National Association of Software Service Companies (NASSCOM) to reposition itself to provide space for internet, mobile and software products; Tata Motors cuts some of its car prices; finance minister P.Chidambaram indicates sops to bump up growth; Chidambaram advises individuals to avoid buying gold in an effort to manage the current account deficit gap widening; Polaris may divest IT services unit; call for a retro tax after resolving Vodafone tax issue; rating agency Moody’s says government’s fiscal plan is realistic; Reliance Industries may align with Samsung and may plan 4G phones for Rs.5K; Mauritius to check misuse of tax treaty; textile companies seek release of cotton from government; finance ministry approves Tata – AirAsia joint venture airline company; survey indicates salary hikes of up to 19 percent, Embassy Group and private equity player Blackstone to acquire IT park in Bangalore; India is fastest growing market for Sony; India and Association of South East Asian Nations (ASEAN) to sign deal on trade in services and investment; mutual funds pay big dividends on equity linked savings and equity funds schemes; real estate company promoter-founder Sobha Developers’ P.N.C Menon pledges half of his $600 million wealth for charity; women may get cheaper health cover; 50 percent rise in women’s role in senior management positions in 2012; and free national roaming for mobile phones likely before October.
The BSE’s benchmark index opened on a subdued note on Monday losing 40.56 points only to bounce back strongly by advancing 1.4 percent on Tuesday, 0.57 percent on Wednesday, and 0.84 percent on Thursday. The Sensex got a further boost from China data on Friday climbing 1.39 percent to close the week on an upbeat mood.
For the week ended March 8, the BSE’s Sensex jumped 764.71 points or 4.04 percent to close at 19683.23 points, while the Nifty advanced 226 points or 3.95 percent to 5945.7 points to finish the week. Except consumer durable in the sectoral indices, other sectors indices closed in the green.
If Realty and Bankex suffered the most in the previous week, it was a bouncing back period for the two sectors as they gained 7.4 percent and 5.5 percent, respectively. Capital goods and oil & gas followed them by advancing 5.3 percent and 4.4 percent, respectively, whereas consumer durables index slipped 2 percent.
Among the 30-Sensex shares, only three stocks closed in the red and the remaining 27 stocks advanced. Hindustan Unilver and NTPC were the worst hit losing 3.25 percent and 0.43 percent, respectively, during the week.
In the realty segment, DLF, HDIL, and Indiabulls Real Estate gained 7.09 percent, 18.04 percent and 7.98 percent, respectively. Similarly, in the banking space, ICICI Bank, HDFC Bank, and State Bank of India closed higher by 7.79 percent, 5.7 percent, and 5.69 percent, respectively, while home lender HDFC finished up by 4.55 percent.
Reliance Industries, an index heavyweight, edged up by 5.13 percent following the telecom department’s approval to allow companies with Internet consents to offer voice services also by making one-time license-conversion fee. Another index component, ITC also moved up by 2.37 percent.
Metal stocks such as Tata Steel, Hindalco Industries, and Sterlite Industries closed higher by 5.18 percent, 2.22 percent and 8.37 percent respectively, following the rise in commodity prices. TCS, Infosys and Wipro grew 5.64 percent, 2.12 percent, and 5.57 percent respectively in the IT space.
Similarly, in the auto sector, Tata Motors, Mahindra & Mahindra and Maruti advanced 5.23 percent, 1.78 percent, and 0.25 percent, respectively. However, two-wheeler maker Bajaj Auto slipped 0.32 percent, whereas Hero MotoCorp closed higher by 5.88 percent.
For the week ended March 8, the FIIs have invested $491.41 million. However, for the month of March, the FIIs inflow is $254.37 million only due to the sell off on March 1 following the confusion on tax treatment in the budget proposals. On the other hand, domestic mutual funds have withdrawn Rs.3.2 billion in March thus indicating the redemption pressure.
For the upcoming week, the markets will likely remain range-bound as investors might resort to profit booking at the higher levels thereby pulling back the benchmark indices from rising significantly.